By Erich Schwartzel and P.R. Venkat
Walt Disney Co. plans to lay off a total of 32,000 employees by March, the company said, a further reduction in its workforce that comes as the pandemic hits the entertainment company's theme-park businesses especially hard.
The number of layoffs is about 4,000 more employees than the previously reported 28,000 job cuts announced in September. Most of the job losses will come in the company's theme-park ranks, where thousands of workers have already been furloughed or laid off.
The severe cuts to Disney's theme-park division accentuates a new reality at the company since the pandemic canceled most live entertainment. Once a reliable moneymaker, the Disney theme parks are now either operating at reduced capacity or closed altogether, with one location -- Disneyland in Anaheim, Calif. -- not expected to reopen until at least next year.
That has forced Disney executives to reorganize the company and shift focus toward its year-old streaming service, Disney+. The service's success in finding early subscribers has saved Disney's share price, which is trading at pre-pandemic levels as investors warm to its growth potential. Even with several vaccines in development and possibly available next year, Disney is betting that its growth for the foreseeable future will come in the living room, not at the theme-park turnstile.
The company has allocated more resources to its streaming operations and even shipped some theatrical releases like "Hamilton" and "Mulan" to the platform. Another service, Star, will expand further overseas. A recent company reorganization put streaming at the center of distribution strategy.
Disney has taken several moves since the pandemic's spread to cut spending and save costs. Earlier this month, the company said it was forgoing its January 2021 dividend and instead investing those funds in its streaming division. The suspension was a marked shift for Disney, which has reliably paid dividends on a semi-annual basis for the past several years. In its regulatory filing Wednesday, Disney warned it could continue to forgo upcoming dividends or cut contributions to employee pension and postretirement medical plans.
It was not the only warning from Disney that spending would continue to be drastically reduced. The company also said it might further reduce capital spending, an indication that the slowdown in costly initiatives like theme-park construction projects is likely to continue. Costs in Disney's film and TV divisions might also be further reduced as the number of productions plummets, and the company has already furloughed some theme-park employees who had been called back to work as it appears reopening will take longer than expected.
"Some of these measures may have an adverse impact on our businesses," the company warned.
Earlier this month, Disney announced a second consecutive quarterly loss as the pandemic struck its core businesses such as theme parks and movie distribution. However, the company's direct-to-consumer business has emerged as a bright spot as quarantine life has increased demand for streaming business.
Subscriptions to Disney+ hit 73.7 million as of Oct. 3, up from more than 60 million reported in August.
Disney said it also plans to launch a general entertainment video streaming offering under the Star brand outside the U.S. in 2021.
"With the unknown duration of Covid-19 and yet-to-be-determined timing of the phased reopening of certain businesses, it is not possible to precisely estimate the impact of Covid-19 on our operations in future quarters," the company said.
Write to Erich Schwartzel at firstname.lastname@example.org and P.R. Venkat at email@example.com
(END) Dow Jones Newswires